Why China Unicom deserves a second look in the 5G era

June 27, 2019 12:47
China Unicom is strengthening its ties with global telecom operators and industry chains to jointly promote the construction of the 5G network. Photo: China Unicom Global

China Unicom (00762.HK, 600050.CN) is an underdog. Among the country's three state-owned telecommunications operators, the company may even look like a bad bet. 

The mighty China Mobile (00941.HK) is the investors' favorite, although it, too, is currently underperforming.

China Mobile shares have risen nearly seven times since its listing in 1997. By comparison, China Telecom (00728.HK) is up 2.5 times since its listing in 2002, while China Unicom is down more than 40 percent since 2000.

In fact, China Unicom is one of the few mainland mega listings that remain underwater.

But its fate may soon change to the better, thanks to 5G.

Speaking at the Mobile World Congress in Shanghai this week, China Unicom president Li Guohua said the government's move to grant 5G commercial licenses to the three telecom operators and China Broadcasting Network Corp. earlier this month signaled the country's entry into the 5G era.

Li believes the 5G sector will soon enter a period of rapid growth with an estimated direct economic benefit of US$1.5 trillion by 2025.

For its part, China Unicom is strengthening its ties with global telecom operators and industry chains to jointly promote the construction of the 5G network.

It has announced the Union for Partners program, which is the company's worldwide partnership with 16 members of the 5G International Partners.

All these moves are taking place amid efforts by the United States to check China's rapid rise as a superpower in the technology arena.

US President Donald Trump has recently focused his attention on Huawei Technologies, which he says the Chinese government can use to spy on the US and allies. The giant company has been placed on the US entity list, which means American companies are severely restricted to sell their products, especially software and high-tech equipment, to the Chinese firm.

But 5G promises to be a game changer. Participants in the Shanghai conference are bombarded with the message that "5G is set to change the world".

For one thing, as China Unicom notes, the fifth-generation mobile technology will be 40 times faster than the current 4G network. It will transform thousands of industries, including manufacturing, energy, media, healthcare, public service and education, through the adoption of artificial intelligence, big data and cloud computing.

To illustrate the power of 5G, one example being given is Huawei's participation in the Dragon Boat Race in Fuzhou on June 7th.

A traditional live broadcast of the event would require a TV van costing more than 50 million yuan (US$7.27 million). But the Chinese telecoms equipment giant live-streamed the race using a 5G backpack that cost less than 10,000 yuan.

China Unicom, meanwhile, has completed commercial trials of its 5G network, which will soon be available in 40 mainland cities, including Beijing, Shanghai, Guangzhou and Shenzhen.

Twelve mobile operators, including Hongkong Telecom, Hutchison Telecom and SmarTone, have joined the alliance led by China Unicom.

At Unicom's 14th international partners' meeting, the partners agreed to join hands in promoting 5G technology and share the fruits of the new era.

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EJ Insight writer